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Stocks coefficient of variation, required rate return and risk analysis
Stock X has a 10% expected return, a beta coefficient of 0.9, and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk premium is 5%.
a) Calculate each stock's coefficient of variation. b) Which stock is riskier for a diversified investor? c) Calculate each stock's required rate return. d) On the basis of the two stock's expected and required returns, which stock would be more attractive to a diversified investor?
Credenza Industries is expected to pay a dividend of $1.20 at the end of the coming year. It is expected to sell for $62.00 at the end of the year. If its equity cost of capital is 8%, what is the expected capital gain from the sale of this stock ..
Suppose a U.S. treasury bond will pay $2,500 five years from now. If the going interest rate on 5-year treasury bonds is 4.25%, how much is the bond worth today?
One year ago, you purchased a 5-year, $1,000 face value, 6 percent coupon bond for $1,012. Interest is paid semi-annually. Today, you sold the bond at a market rate of return of 6.27 percent. What is your total return in dollars on this investment..
St. Vincent's Hospital has a target capital structure of 35 percent debt and 65 percent equity. Its cost of equity (fund capital) estimate is 13.5 percent and its cost of tax exempt debt estimate is 7 percent. What is the hospital's corporate cost..
Calculate the value of a bond that expects to mature in 10 years and has a $1000 face value. The coupon interest rate is 12% that paid semiannually and the investor's required rate of return is 20%.
Suppose England raised its corporate tax rate by 1 percentage point from 40% to 41%. How would this increase affect the economics of a U.S.-U.K. foreign expansion project?
Contrast the differences/similarities of common stocks and bonds. Explain how they would be used in the corporate environment.
Describe some of the short-term investment vehicles that you use to manage your cash resources. Why did you elect these vehicles over the alternatives? What are their primary advantages and disadvantages?
When the cost of an investment come before that investment's benefits, what will be the effect of a rise in interest rates on the attractiveness of that investment to potential investors?
What is the yield on this 5-year corporate bond? Round your answer to two decimal places.e your question here.
Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year.
The required rate of return is 12% and the cash flows from a potential project under three scenarios are below.
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